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Look back for a brighter future

We can already see New Labour in some kind of historical perspective; and the judgement of history will not be kind. At the next election the voters will consign it to opposition and probably desert it in huge numbers, possibly on the scale of the Conservative defeat of 1997. Of course, in our electoral system, even a government that lasts three terms eventually returns to the opposition benches: there is not necessarily any ignominy in that. It depends on its legacy. I vividly recall a discussion at a seminar in 1998, organised as part of the preparation for a special issue of Marxism Today on New Labour. Most of the participants were to varying degrees inimical to New Labour and sceptical about its agenda. The few who were supportive argued that the key task was to secure two or more terms.

The 1945 Labour government enjoyed just one term, barely won the next election, and soon limped into opposition. By the criteria of those New Labouristas, the government of 1945 was a failure; yet by any substantive measure, it was a huge success. In its commitment to the welfare state and full employment, and with the creation of the National Health Service, it set the parameters of politics for the next 30 years; every Conservative government until Thatcher’s election in 1979 had to live by its terms. The 1945 government was by far the most influential Labour government ever and certainly the most reforming, ushering in the social-democratic era.

So what then of New Labour’s political legacy? From the outset, it was founded on a deep pessimism, the belief that there was no alternative other than to acquiesce in the Thatcherite settlement. The meaning of the “new” in New Labour was that Labour should abandon any claim to a distinctive project, and that at most it could only provide a variant of Thatcherism. In other words, New Labour played the same role in relation to Thatcherism as the Conservative governments of the 1950s and 1960s performed towards the 1945 government. The contrast between 1945 and 1997, therefore, could hardly be greater: New Labour will have lasted 13 years and have precious little to show for it.

Looking back at 1997, one is struck by the sheer failure of intellectual and political courage that informed New Labour. Of course, it was full of fine words – about its radicalism and its project (a much-repeated word, you may remember) – but these were no more than a smokescreen, designed to conceal the fact that, from the beginning, it did not actually have a project worth the name, and certainly no reforming ambition.

How did Labour come to this? Why did it elect a leader who felt so comfortable with the That­cherite settlement? Between the late 1970s and the mid-1990s, Labour was roundly beaten in four successive general elections; furthermore, it decisively lost the intellectual argument, so that by the time of John Smith’s death in 1994, it was prepared to try anything to stave off another defeat. Its willingness to elect Tony Blair as leader was an act of desperation.

In retrospect, such desperation – its preparedness to abandon its core beliefs and values – must be seen as one of Labour’s darkest hours. The social-democratic era – the legacy of the 1945 government – was the high-water mark in Labour’s history. Prior to 1945, Labour governments had been more or less indistinguishable from Conservative ones, possessed of neither the confidence and competence nor the intellectual independence to do anything different. The 1945 government marked a complete break with them. By contrast, 1997 represented the opposite, a step back into history: a rejection of social democracy and the abandonment of a commitment to and belief in the idea that Labour could be distinctive and original, that its purpose was not simply to offer a variant of Conservatism.

The party embraced the market and welcomed it into the institutions of the public sector in a manner that the Conservatives would never have dreamed of. Equality and redistribution became dirty words, frowned upon, never – until very recently at least – to pass the lips of Labour leaders. There cannot be the slightest surprise that inequality has increased under New Labour; its commitment to equity has been minimal.

But now, with the collapse of neoliberal economics, we can see that this pessimism, the belief that there was no alternative to Thatcherism and all its works, was complete bunk. The financial crisis has demonstrated that the New Labour project was predicated on a series of fallacies: the market always knows best; the state should mimic the private sector; businessmen and bankers could be depended upon to provide the best solutions, whatever the problem; the state should not meddle in the private sector; the logic of the market applies almost universally; the boom-and-bust cycles of capitalism had finally been abolished and we had entered a new and virtuous era of growth and prosperity.

On the contrary, we have learned in the most brutal fashion that the market can behave with calamitous irrationality, that only the state is capable of rescuing the economy from Armageddon, that it rather than the private sector represents the public interest, that financiers – the darlings of the neoliberal era – are gamblers and hucksters whose main motivation is greed and who had not a clue as to the consequences of their own actions. And we have learned the cost of believing that money is everything – witness the petty corruption that has spread like a cancer among MPs and is reflected throughout our society. New Labour may have subscribed to the view that there was no alternative to Thatcherism, but, as a result of the financial crisis and Britain’s worst recession since the 1930s, society is now, whether it likes it or not, faced with the task of finding that alternative.

The hard truth is that New Labour may have lasted 13 years in office, but its political project barely survived a decade. Unlike Clement Attlee’s 1945 government, which achieved so much, tried so hard and is remembered so fondly, New Labour will go down in the annals of labour history as a failure of the first order, lacking any kind of political courage, possessing barely any reforming intent, and enthusiastically playing out the role of intellectual clone to Thatcherism. In its slavish submission to neoliberal orthodoxy, the parallels between New Labour and Ramsay MacDonald’s government of 1929 are hard to resist.

What, then, was the point of New Labour?

To serve three terms? This is meaningless unless there is something substantial to show for it. More persuasively, perhaps the point was to show that, after 18 years in opposition, it was still possible for Labour to win? There is something in this, though it, too, is based on a fallacy. In truth, Labour would have won the 1997 election under John Smith such was the disarray of the Tories and the electorate’s desire for change. It did not require Labour to roll over on its back in order for it to win. Perhaps Labour’s majority would not have been quite as large if Smith had been leader, but it would certainly have been very substantial and, most importantly of all, its soul would have remained intact. In 1997, the party was gifted with a historic opportunity – a huge majority and a discredited Tory rump – which no previous Labour government had ever enjoyed. That opportunity was squandered by New Labour.

L­abour now faces many years in the wilderness. These will be very different from the 1980s and 1990s, however. Then, Labour was smarting from an ideological defeat. This is not the case now: rather, both major parties have been discredited by the financial crisis. New Labour has been undermined not by its political opponents, but by reality. As a result, the scope for change and reconstruction is greater. It spent most of its time in opposition during the 1980s in self-denial, believing that it needed to change hardly at all.

Now it is obvious: the conventional political wisdom of the post-1979 era has been fatally undermined. How Labour will respond is another question altogether, of course. Certain people – Alan Milburn and Stephen Byers, for instance, devotees of market fundamentalism both – have learned nothing, even though history has dismantled all the basic premises of their way of thinking.

But, unlike the 1980s, there are many people already seeking to establish a new kind of reforming approach in the teeth of the palpable failure of the Anglo-Saxon model: Joseph Stig­litz and Paul Krugman in the United States; Willem Buiter, Vincent Cable, Richard Wilkinson and Polly Toynbee here. Then there is the inspiration offered by Barack Obama, of course – a very new kind of reforming figure and a far cry from the cynicism of Bill Clinton and the reactionary politics of George W Bush. These are not bleak intellectual and political times – far from it.

All of these figures can be classified as broadly on the left – though none is in the Labour Party or its immediate orbit. Yet this should not matter in the least, provided Labour is prepared to engage in a political conversation and to listen to and learn from them.

Let me give an example of an opportunity that a bolder and more courageous leader than Gordon Brown might have considered. Since the Northern Rock fiasco in 2007, Vincent Cable has been, by some distance, the boldest and most prescient analyst of the financial crisis in the entire political class. In the present circumstances, he would be by far the best chancellor of the Exchequer. So, why not? It would have been a masterstroke: a way of reaching out beyond Labour and a gesture of humility, an acknowledgement that someone outside Labour’s own ranks had got things right – not to mention a way of announcing a much more critical stance towards the City. It’s the stuff of dreams, of course, but it is what Labour must do if it is begin to reconstitute itself as a party for a very different era.

Martin Jacques is a journalist and academic. He is currently a visiting fellow at the London School of Economics Asia Research Centre and at the National University of Singapore. Jacques previously edited Marxism Today and co-founded the think-tank Demos in 1993. He writes the World Citizen column for the New Statesman. His new book on the rise of China, When China Rules the World, will be published in June.